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THE MINISTRY OF PLANNING AND INVESTMENT

CIRCULAR No. 15-1997/TT-BKH OF OCTOBER 24, 1997 GUIDING THE IMPLEMENTATION OF THE REGULATION ON THE MANAGEMENT AND USE OF OFFICIAL DEVELOPMENT ASSISTANCE (issued together with Decree No. 87-CP of August 5, 1997 of the Government)

On August 5, 1997, the Prime Minister signed Decree No. 87-CP to issue the Regulation on the use and management of the official development assistance (hereafter referred to as the ODA Regulation).

In furtherance of Article 3 of this Decree, the Ministry of Planning and Investment hereby provides general guidance on some major issues (apart from the contents in different fields to be separately guided according to the functions of the concerned ministries) in replacement of Circular No. 07-UB/KTDN of July 18, 1994 of the State Planning Committee guiding the Regulation on the Management and Use of the Official Development Assistance issued together with Decree No. 20-CP of March 15, 1994.

Chapter I

GENERAL PROVISIONS

1. Scope of regulation

Following is the concrete guidance on the scope of regulation of the ODA Regulation which covers the subjects defined in Article 1 of the ODA Regulation :

a/ The foreign ODA donors include:

- Foreign governments;

- Development organizations of the United Nations (UN), including: the United Nations Development Program (UNDP); the United Nations Children�s Fund (UNICEF); the World Food Program (WFP); the Food and Agriculture Organization of the United Nations (FAO); the United Nations Population Fund (UNFPA); the United Nations Capital Development Fund (UNCDF); the United Nations Industry Development Organization (UNIDO); the Office of the United Nations High Commissioner for Refugees (UNHCR); the World Health Organization (WHO); the International Atomic Energy Agency (IAEA); the United Nations Economic, Scientific and Cultural Organization (UNESCO), etc.

- Inter-governmental organizations, including: The European Union (EU), the Organization of Economic Cooperation and Development (OECD), the Association of Southeast Asian Nations (ASEAN)...

- International financial organizations, including: the World Bank (WB); the Asian Development Bank (ADB); the Organization of Petroleum Exporting Countries (OPEC), the Northern Europe Investment Bank (NIB) and the Northern Europe Development Fund (NID); the Kuwait Fund, the International Fund for Agricultural Development (IFAD), etc. (except the International Monetary Fund)

- Foreign conglomerates and companies that provide financial support to the Vietnamese Government. The foreign governments� ODA funds that finance the programs and projects in Vietnam through non-governmental organizations (NGO).

b/ ODA provision forms include:

- Support for the payment balance: including ODA grants made in cash or commodities to support the government budget.

- Support for programs: including ODA grants for the implementation of a program so as to achieve one or more objectives through a number of projects carried on in a given period of time at particular places (Japan�s credit program to finance the restoration and development of rural communications, the development of the rural power supply network, the development of clean water supply systems in urban centers...)

- Technical assistance: in order to develop the institution and promote the capacity of Vietnamese agencies, encourage technology transfer through the supply of experts and volunteers, provision of equipment and facilities, organization of on-the-spot or overseas short-term training courses of less than one year for Vietnamese personnel, and support for basic research and survey (elaboration of overall planning and feasibility study reports...). Technical assistance may cover several or all the contents mentioned above.

- Support for projects; To grant ODA for carrying out capital construction projects including those under construction and installation or only the supply of equipment. Capital construction projects may include consultancy services, on-the-spot or overseas training of Vietnamese personnel.

c/ Types of ODA:

- Non-refundable ODA: Foreign parties grant non-refundable aid for the implementation of ODA programs and projects (the amount of financial support shall be agreed upon by the foreign parties).

- ODA loans, including:

+ Preferential ODA loans (or preferential credit) which are ODA loans with a non-refundable part representing at least 25% of the value of each loan. The foreign parties often set specific conditions for such preferential loans.

+ Mixed ODA loans which are composed partly of non-refundable ODA (or preferential ODA loans) and partly of commercial credit under the conditions set by the Organization of Economic Cooperation and Development (OECD).

2. In addition to the fields that are given priority in the use of ODA defined in Article 3 of the ODA Regulation, other fields that may have access to ODA include small- and medium-size projects capitalized at less than 3 million USD in the fields of industrial production, processing of agricultural, forestry, aquatic and marine products... so as to create jobs and increase the income of the laborers.

Basing itself on the ODA sources and conditions required by the foreign parties, the Ministry of Planning and Investment shall submit to the Prime Minister for decision the projects in other fields eligible for ODA fund.

Chapter II

MOBILIZATION, NEGOTIATION, CONCLUSION, APPROVAL AND RATIFICATION OF INTERNATIONAL AGREEMENTS

1. ODA mobilization

a/ ODA mobilization shall be carried out at such forums as the consultative group meetings of Vietnam�s donors (CG), meetings on coordinating financial support for branches, external relation activities of the ministries, the provinces and cities directly under the Central Government and activities of overseas Vietnamese diplomatic missions.

b/ The Ministry of Planning and Investment is the Government�s coordinator in preparing CG meetings which are presided over by the World Bank (WB).

The Ministry of Planning and Investment shall, together with other specialized ministries, organize and preside over conferences coordinating financial support for branches.

While carrying out external relation activities to mobilize ODA the concerned agencies should base themselves on the social and economic development strategy, the public investment program, the ODA attraction and use plan, five-year plans, annual plans and the State�s demand for support capital from external sources in each period of development as well as the branches� and localities� needs and priority fields calling for ODA.

Before mobilizing ODA, the concerned agencies and localities should consult with the Ministry of Planning and Investment about the donors� policy, capabilities and strengths as well as our policy toward the concerned donors.

2. Preparation and approval of the list of ODA-funded programs and projects

a/ On the basis of the agreements with the foreign parties, the Ministry of Planning and Investment shall provide the following guidance for the ministries, the ministerial-level agencies, the agencies attached to the Government, the provinces and cities directly under the Central Government (hereafter referred to as agencies in need of ODA) on:

- Priorities for the use of ODA set by the foreign parties and our Government.

- The ODA provision conditions set by the foreign parties.

- The ODA procedures set by the foreign parties.

- The deadline for preparation of project plans.

b/ Basing themselves on the guidance of the Ministry of Planning and Investment, the ODA-requesting agencies shall make a written proposal attached with the project plan in Vietnamese language and their English translations and send all to the Ministry of Planning and Investment.

c/ The Ministry of Planning and Investment shall consider ODA project plans, consult the concerned agencies and ministries, make a list of the plans and submit it to the Prime Minister for decision.

d/ After the Prime Minister approves the list of ODA-funded programs and projects, the Ministry of Planning and Investment shall notify the foreign parties thereof.

The Ministry of Planning and Investment shall notify the ODA-requesting agencies of the projects which the foreign parties have agreed to consider for financial support so that preparatory steps can be made.

e/ The Ministry of Planning and Investment shall, on the basis of the written comments of the ODA-requesting agencies and the agreements of the foreign parties, sum up and submit to the Prime Minister for decision on any additions or adjustments to the list of ODA-funded programs and projects already approved by the Prime Minister

f/ In exceptional cases, when a foreign party proposes a project to an ODA-requesting agency, the Ministry of Planning and Investment shall, on the basis of the written comment of the ODA-requesting agency together with the ODA project plan, submit the matter to the Prime Minister for decision.

3. Preparation and approval of the contents of ODA-funded programs and projects

a/ After the foreign parties pledge to consider and finance the projects on the list already approved by the Prime Minister, the ODA-requesting agencies shall direct the implementing agencies (project owners) to prepare ODA project dossiers. Depending on the ODA grant forms, a project dossier may be:

- A project document (for technical support programs or projects).

- A pre-feasibility study or feasibility study report (for capital construction projects).

The form and requirements for the contents of a project document or pre-feasibility study or feasibility study report shall comply with the stipulations of the foreign party and our current regulations in the government decrees on the management of investment and construction (No. 42-CP, No. 92-CP and subsequent decrees regarding this field).

The skipping over the pre-feasibility study stage required by capital construction projects shall be considered and decided by the level competent to approve the project contents.

The ODA project dossier should clarify the foreign party�s stipulations on the mode of implementation of the ODA project, for example, the mode of procurement of goods, services (unrestricted international bidding, restricted bidding, international purchase, etc.).

The project document or the pre-feasibility study (feasibility study) report shall be made by the project owner with or without the assistance of the foreign party�s representative.

b/ The ODA-requesting agency shall send to the Ministry of Planning and Investment the ODA project dossier for evaluation or approval. A dossier includes:

- A written request for evaluation or approval.

- The project document or the pre-feasibility study (feasibility study) report: 5 Vietnamese language copies and 5 English translation copies. This is the document already agreed upon by the ODA-requesting agency and the foreign party�s representative (the expert(s) appointed by the foreign party to assist in the formulation of the project document or the pre-feasibility study (feasibility study) report).

c/ The evaluation and submission to the Prime Minister for approval of ODA-funded programs and projects shall be conducted as follows:

- For the programs and projects that use ODA capital (including loans and non-refundable aid) each with a total investment capital equal to that of a Group A project as prescribed in the government decrees on the management of investment and construction (No. 42-CP, No. 92-CP and subsequent relevant decrees). Within 45 days from the date of receipt of valid ODA project dossiers, the Ministry of Planning and Investment shall organize the evaluation of the programs and/or projects. The evaluation shall comply with Decree No. 42-CP of July 16, 1996 of the Government issuing the Regulation on the management of investment and construction.

- For the programs and projects that use non-refundable ODA each with a capital of 500,000 or more USD, after receiving full and valid dossiers, the Ministry of Planning and Investment shall send a written request to the Ministry of Finance and the specialized ministry (if any) to consider and give their written comments on the project documents. Within 15 days from the date the Ministry of Planning and Investment sends the written request, the above-said agencies, when being consulted, shall give their official written comments on the project documents and send them to the Ministry of Planning and Investment. These written comments shall be regarded as the official basis for subsequent evaluation of the project documents. Past this time limit, if these agencies have no written comments, they shall be deemed to have approved the project documents.

Ten days after the above-said time limit, depending on the complexity of each project, the Ministry of Planning and Investment shall sum up the evaluation comments and submit them to the Prime Minister or organize a meeting to evaluate the project document. The representatives of the Office of the Government, the Ministry of Finance, the ministries and the ministerial-level agencies (if necessary) shall be invited to such meeting.

The evaluation result and the conclusion of the evaluation meeting shall be incorporated in the evaluation report. Not later than 5 days from the date of evaluation, the Ministry of Planning and Investment shall finalize, submit the evaluation report to and propose the Prime Minister to consider and approve or authorize the ministries and localities to approve the project documents (depending on the size and importance of each project).

After the Prime Minister approves the project document, the Ministry of Planning and Investment shall notify the foreign party thereof so as to proceed with the signing and execution of the project.

d/ Within 30 days from the date of receipt of the valid ODA project dossier, the Ministry of Planning and Investment shall have a written agreement (or disagreement) to allow the ODA-requesting agencies to approve the non-refundable ODA projects each with a capital of less than 500,000 USD and projects using ODA loans each with a total capital of less than that of a Group A project and in accordance with the government decrees on the management of investment and construction (No. 42-CP, No. 92-CP and subsequent relevant decrees).

Within 7 days after the ODA project is approved, the ODA-requesting agency shall have to send the approval decision (the original version) to the Ministry of Planning and Investment.

The Ministry of Planning and Investment shall notify the foreign parties and the Government�s concerned agencies of the approval of the project document (feasibility study report) by the competent Vietnamese agencies for negotiation and conclusion of ODA international agreements.

4. Negotiation and conclusion of ODA international agreements

a/ ODA international agreements are construed as treaties, protocols, memos of understanding, project documents or any other documents that are concluded by the Vietnamese side (the heads of ODA-requesting agencies authorized by the State or the Government) and the foreign parties.

- The ODA framework international agreements are principle commitments related to the strategy, policy and priority orientation for the development cooperation between Vietnam and the foreign parties; the list of ODA-funded branches, programs and projects; the framework conditions and ODA pledges for one-year or multi-year cycle of a project (program) or many projects (programs), the principles on the project implementation and management mode and plan... At present, a framework international agreement in the practice of development cooperation between our country and a foreign party usually includes: a list of programs and/or projects for cooperation with such international financial institutions as WB, ADB; a list of annual and long-term programs and/or projects for bilateral cooperation with donors; principled protocols, pacts and/or agreements on ODA programs and/or projects; exchanged letters and notes; memos of understanding as basis for the implementation of specific ODA programs and projects; national programs (each with a cycle of from 2 to 5 years) in cooperation with the organizations of the United Nations system...

- Specific ODA international agreements are documents concretizing the ODA framework agreements related to the donors� and Vietnamese side�s specific commitments regarding the contents, financing conditions; capital and its structure; responsibilities, interests and obligations of the Vietnamese side and the foreign parties; project implementation and management; debt payment and capital disbursement conditions for a specific program and/or project so as to complete the financial procedures of programs and projects with a view to implementing the already signed framework agreement.

b/ On the basis of the socio-economic development strategy, the public investment program, the ODA solicitation and use plan, five-year and annual plans set by the State as well as its demand for external sources of financial support in each period of development of the State, the ministries, the ministerial-level agencies, the agencies attached to the Government, the People�s Committee of the provinces and cities directly under the Central Government, the Ministry of Planning and Investment shall assume the prime responsibility and coordinate actions with the concerned agencies in preparing the contents and negotiating and concluding ODA framework international agreements with the foreign parties.

c/ On the basis of the ODA framework international agreements already signed with foreign parties the project documents (feasibility study reports) already approved by the competent level, the ministries, the ministerial-level agencies, the agencies attached to the Government, the People�s Committees of the provinces and cities directly under the Government shall proceed to negotiate with the foreign parties:

- The ministries, the ministerial-level agencies, the agencies attached to the Government, the People�s Committee of the provinces and cities directly under the Central Government shall assume the prime responsibility and coordination with the Ministry of Planning and Investment and concerned agencies in negotiating specific international agreements on non-refundable ODA.

- The Ministry of Finance shall assume the prime responsibility and coordinate with the Ministry of Planning and Investment, the ODA-requesting agencies and concerned agencies in negotiating with the foreign parties on specific agreements on ODA loans.

- With the authorization of the State President or the Prime Minister, the State Bank of Vietnam shall coordinate with the Ministry of Planning and Investment, the Ministry of Finance, the ODA-requesting agencies and the concerned agencies and assume the prime responsibility for entering into negotiations with the World Bank (WB), the Asian Development Bank (ADB) and the International Monetary Fund (IMF) on specific ODA international agreements (loan treaties, loan agreements, technical assistance agreements).

In the course of negotiating on specific ODA international agreements, if there are any changes in the program or project document (feasibility study report) already approved by the competent level, such competent level shall decide these changes. If the approval level is the Prime Minister, the Ministry of Planning and Investment shall, at the proposal of the agency in charge of negotiation, submit the change(s) to the Prime Minister for decision.

d/ Upon the completion of negotiation, the agency in charge of negotiation shall submit to the Prime Minister a report on the negotiation result together with the contents of the agreement to be signed with the foreign party and recommend the person who can, on behalf of the Government, sign the specific ODA international agreements with the foreign party.

Basing itself on the above-said report to the Prime Minister, the Ministry of Planning and Investment shall submit to the Prime Minister its opinion on the negotiation result, its recommendations on the approval of the negotiation result and recommendations on the authorization of the signing of the specific ODA international agreement with the foreign party and notify the foreign party of the Prime Minister�s decision.

For those donors that do not require negotiations on specific ODA international agreements, the program or project-execution agency shall organize the signing and proceed with the execution of the program or project after the Ministry of Planning and Investment officially notify the foreign party of the Vietnamese competent level�s approval of the program or project.

Chapter III

EXECUTION OF ODA-FUNDED PROGRAMS AND PROJECTS

1. Capital adjustment or addition to ODA-funded programs and projects:

The capital adjustment or addition for an ODA-funded program or project that does not alter its objective, contents and size already approved by the competent level (if total ODA capital after adjustment or addition does not exceed the level prescribed in Clause 2, Article 6 of Decree No. 87-CP of August 5, 1997) shall be decided by the level that has approved the ODA-funded program or project within 15 days from the date it receives a written approval of such change from the Ministry of Planning and Investment

For ODA-funded programs and projects approved by the Prime Minister, the ODA-requesting agency shall send a written request on the project�s capital adjustment or addition to the Ministry of Planning and Investment, the Ministry of Finance and the specialized ministry (if any). After 15 days from the date the ODA-requesting agency sends such request, if the Ministry of Finance and the specialized ministry have no opinion, they shall be deemed to have approved it. The Ministry of Planning and Investment shall submit the capital adjustment or addition to the Prime Minister for approval.

2. Within two weeks after the end of each quarter and one month after the end of each year, the managing board of an ODA program or project shall have to send a report on the program or project execution according to the prescribed form (for ODA projects of Group A, monthly implementation reports are required) to the Ministry of Planning and Investment, the Ministry of Finance and the General Department of Statistics.

3. Within 3 months after the completion of an ODA-funded program or project, the program or project managing board shall have to send to the higher-level agencies (the ministries, the ministerial-level agencies, the agencies attached to the Government or the People�s Committees of the provinces and cities directly under the Central Government), the Ministry of Planning and Investment, the Ministry of Finance, the State Bank and the General Department of Statistics report according to the prescribed form on the final implementation results of the ODA-funded program or project together with the financial statement (under the guidance of the Ministry of Finance).

This Circular takes effect 15 days after its signing. In the course of implementation if any problem arises, the ministries, localities and concerned units should promptly notify the Ministry of Planning and Investment for further improvement of this guiding Circular.

The Minister of Planning and Investment

TRAN XUAN GIA